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Searching SEC Comment Letters
Tuesday, December 6, 2016

This week marks one of the most important events in the financial reporting world: the AICPA’s annual Current SEC & PCAOB Developments conference, happening Monday through Wednesday in Washington.

According to those attending the conference (you can follow along on Twitter at #AICPAsec), the agenda has been dominated by complex financial reporting topics such as segment reporting, internal control over financial reporting, non-GAAP measures, and the like.

Let us humbly insert Calcbench into that conversation.

Aside from the extensive formal guidance the SEC offers about financial reporting, a considerable amount of unofficial guidance comes in the form of comment letters: notes the SEC staff sends to U.S. filers, inquiring about how the filer is applying certain accounting rules or concepts to its financial reporting. Comment letters don’t have the force of law, but they can attract considerable notice—especially if the SEC sends comment letters to multiple firms within the same industry, or to multiple firms on the same topic.

As one example, the SEC recently sent four comment letters to Tesla Motors frowning upon the electric car company’s methods to calculate revenue. Tesla had used those calculations to publish non-GAAP revenue metrics in earnings releases, even though its methods ran counter to SEC formal guidance from earlier this year.

You might be thinking, “Hmmm, how can I read comment letters the SEC sends out?”

Well, fear not—Calcbench has you covered!

To search for comment letters, start by visiting the Disclosures & Footnotes Query page. In the “Choose Footnote/Disclosure Type” menu bar on the left side, search near the top. There you’ll see several selections that qualify as 8-K or proxy statement disclosures—and among them is the choice for SEC comment letters.

Let’s use Tesla as an example. We know that the SEC swapped comment letters with Tesla over the summer. So first we want to set Tesla as our company to search. Then we set our search period as calendar third-quarter 2016. Finally, we go to the disclosure menu on the left, and look for “SEC comment letters” choice.

Sure enough, we see that selection has two instances of correspondence, which means four letters exchanged. (See figure 1, below. Disclosure menu circled in red, date field circled in blue.)

And if you don’t have any specific company in mind? That’s easy too. You can search any peer group you like (S&P 500, Dow Jones Industrial Average, or a group you create yourself), and repeat the same processes of searching by date and by disclosure type. Among the Dow Jones Industrial Average, for example, we can find 14 comment letters from the third quarter.

The point being, Calcbench can provide all the usual analysis—fast, precise, accurate—even for SEC comment letters. They are a rich source of insight, and worth any financial reporting professional’s time.


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